Strategic analysis of a manufacturing company and the North American auxiliary power unit market

Power Systems has been the leader in the truck auxiliary power unit business since 2000 and has been making significant advancements in the price of the product as well as its reliability and robustness. Unfortunately the reliability and robustness requirement is increasing further and the profit margin is shrinking to the point that Power Systems needs to undertake a new product development program. The new product offering will result in zero increase in the price to the customer but provide a lower cost to manufacture, while at the same time addressing the reliability requirements of the market. The market focus also needs to change to that of the fleet customers, with a reduced emphasis on the individual owner operators of trucks. The strategy proposed is in alignment with the current cost based strategy of the company but requires a few modifications to the organization structure and management systems